Tags: Viacom | balanced | portfolio | VIAB

Viacom a Balanced Portfolio in Entertainment

By    |   Monday, 02 April 2012 09:53 AM

Entertainment production company Viacom (VIAB) provides investors with a balanced investment in a portfolio of cable television networks and in a major movie studio. In November 2011, the company transferred its stock listing from the New York Stock Exchange to the Nasdaq and it now trades under the VIAB stock symbol for the widely held class B shares.

Viacom owns close to 20 cable networks, including MTV, VH1, BET and Nickelodeon. International versions of the network triple the number of counted networks. Viacom also owns the Paramount Pictures motion picture studio.

For the 2011 fiscal year, media networks generated about 60 percent if Viacom's revenue and filmed entertainment was responsible for the balance. In 2011, media revenue grew by 10 percent and movie revenues increased by 15 percent.

Viacom closed the 2012 fiscal first quarter on Dec. 31, 2011. For the 2012 first quarter, reported revenue was $3.95 billion, up 3 percent from $3.83 billion. Earnings from continuing operations were $591 million, down 5 percent from a year earlier.

Net income per share came in at $1.06, up from $1.02. The higher per share income was due to a smaller outstanding share count. For the full 2012 fiscal year, the Wall Street consensus earnings estimate is $4.27 per share compared to $3.78 earned in 2011.

Steady plus variable

Viacom's media networks produce relatively steady revenue from advertising sales and affiliate fees. Results from filmed entertainment are more variable, depending on the success of the movies released during any specific period of time.

For example, total revenue declined in 2009, primarily on a 9 percent drop in revenue from filmed entertainment. When looking at the Viacom financials for the last few years, note that the company's 2010 fiscal year was only nine months long.

Viacom has been aggressively returning free cash to shareholders. In 2011, the dividend was increased by 60 percent to 25 cents quarterly from the previous 15 cents. Over the last six quarters the company spent $3.9 billion on share buybacks out of a $10 billion authorization.

Recently the analysts at Sanford Bernstein initiated coverage on the major media and entertainment stocks. The initial rating on Viacom is market perform.

The company next reports on May 3.

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